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New study shows why cable TV is actually doomed

Published Jul 16th, 2017 1:02PM EDT
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Streaming services are trying to make cable TV redundant, and they’re having some success. We already knew that much; the only question left is how long the change is going to take, and what pay TV will look like when we come back out the other side.

A new survey on streaming TV packages sheds some light on what’s happening in the pay TV industry. Although cable TV has remained remarkably resilient for an expensive product that everyone seems to hate, cheap streaming services are gaining ground.

New data from Parks Associate’s OTT Video Market Tracker shows that nearly 60% of Americans now subscribe to one of the three big video streaming services: Netflix, Amazon Prime Video, or Hulu. The lion’s share of subscriptions goes to Netflix (surprise!), which is a staple in nearly 40% of American households. Prime Video is second, with Hulu trailing in third.

When you add on other, less popular subscription services, around 65% of all households pay for some kind of streaming service. By comparison, around 75% of households are predicted to have some kind of pay TV subscription in 2017. That 10% difference is not a big gap left to bridge.

But this is all stuff we more or less knew. The really interesting data from Parks’ report is around small streaming services. It reports big growth in niche streaming services like WWE Network and MLB.TV. While small sports-focused services like that are still a small percentage of the overall streaming industry (and a tiny fraction of pay TV overall), their mere existence presents a challenge to the traditional cable business model.

The setup for years has been that you pay one company — your cable provider — for access to news, TV shows, movies, and sports. The cable provider packages all those channels together and takes a big cut before paying the content creators, something that’s worked well for the multi-billion-dollar industry for decades.

What Parks’ report shows is that the landscape may well be changing. You can build your own entertainment package through a selection of streaming services, without paying for anything you don’t want. Netflix does the TV shows, services like NFL GamePass and MLB.TV do the sports you care about, and hey, you can even buy Hulu direct these days.

Cable companies have already shown us what they think the future of pay TV should be: $35-a-month streaming services that work exactly like cable apart from that they come over your internet connection. But there’s an alternative future, one in which you don’t buy a bundle at all any more, and just subscribe to the services you want to get the content that you need, without paying for a bunch of crap you’re never going to watch. It sounds great for consumers, and you can imagine that it has Comcast downright terrified.

Chris Mills
Chris Mills News Editor

Chris Mills has been a news editor and writer for over 15 years, starting at Future Publishing, Gawker Media, and then BGR. He studied at McGill University in Quebec, Canada.